PPARgamma is a ligand-activated transcription factor that serves as a central regulator of adipocyte differentiation. PPARgamma has been the focus of intense research since its discovery as a molecular target of the thiazolidinedione class of drug. Here we review regulation of differentiation and hypertrophy of adipocytes and adipokine network by PPARgamma with an emphasis on their influences on systemic glucose and lipid metabolism. Specific topics include the mechanism by which both activation of PPARgamma by thiazolidinedione and haploinsufficiency of PPARgamma leads to insulin sensitivity and recent advance in our understanding of the role of adiponectin and adipose tissue macrophages in insulin sensitizing action of thiazolidinedione.